The Nightingale apartment development in Melbourne’s inner city Brunswick was set to break all the rules of conventional development: highly sustainable design, disruptive finance modelling bringing prices down significantly and no cars; residents would instead be issued with “green travel plans” for public transport.
But last week those plans were scotched when an action brought by an adjoining developer won its bid in the Victorian Civil and Administrative Tribunal to overturn Moreland City Council’s approval of the project.
The case has not only had ramifications for Moreland, but also for any Victorian council with sustainability ambitions, not to mention the investor/buyers who now need to have their deposits refunded.
Jeremy McLeod, director of Breathe Architects, which leads the project, says it is now back to the drawing board, with a set back of 6-12 months. The whole procedure is hugely disappointing, he says.
But there’s a bright side – this kind of development, which switches the focus of development profits on its head, turning the benefits from the developer to the people who will live in the property, is not about to disappear. In fact, it’s just about to ramp up big time.
According to Mr McLeod, from early this year – around the time we first ran the story on Nightingale – the wait list for buyers in the 20-unit building jumped from 72 to 660.
Mr McLeod says he’s already been invited to present the project to the Design Canberra Festival. There are invitations from Sydney and a group of architecture students is running an “advocacy Instagram” on the site, called “Housing people not cars”.
This is big, Mr McLeod says. On the day after the VCAT story broke in The Age, he received 450 emails on the issue.
Even better is that there are two more iterations of the project well on the way: Nightingale2 will be at 72a Station Street Fairfield, and Nightingale3 just rang up $2 million in commitments from its first investor information night.
Key is collaboration.
Right from the start there has been a learning and sharing agenda to these projects. Nightingale initially spun off its “sister project” The Commons across the road on Florence Street, first reported in these pages back in 2012, and it’s using a model that involves a number of architects each helping with the projects in turn. They include Six Degrees, Clare Cousins and Andrew Maynard.
Even the finance is collaborative. There are 17 “ethical investors” – “Everyone’s borrowed $100,000 against their houses,” Mr McLeod says – and then there is a lending club of three financiers interested in sustainable/social outcomes – Social Ventures Australia, Foresters Community Finance and Social Enterprise Finance Australia lending finance for construction.
“They’re in a lending club, all working together to fund the projects.”
This is powerful stuff, he says.
“Just by taking equity early you can reduce the price of development by nearly $50,000 on a $400,000 property. It’s incredible.”
Deleting car parking shaves another $30,000 from the costs.
So what went wrong? And what now?
The judgment by senior member of VCAT Russell Byard is a very interesting read for anyone in this game.
It’s an attempt by a leading legal mind to come to terms with a kind of “uberisation” of the development and investment world, where it’s not always easy to sort the good outcomes from those thorny “unintended consequences” that seem to plague anything new.
There are lessons to be learned for both sides and in speaking to a number of people involved and impacted by the case, that’s the take-home message we found. But it’s also a document that reveals the tensions between the old and new paradigms, with sometimes curious conclusions or statements (see below).
The outcome, in short, is that VCAT has decided that having no parking on site may be a sustainable idea, but one that might have an impact on the traffic and parking burden experienced by surrounding neighbours.
Most important is that Mr Byard said the sustainability outcomes or affordability of the project did not necessarily rule out the need to provide parking, which is mandated by the state government using a formula based on numbers of bedrooms.
Mr McLeod says the meaning of the decision is that The Commons was “a snapshot in time”. By this he means that when The Commons deleted parking from its plan, it set a new precedent because it challenged the state’s parking rules.
Now that VCAT has made a ruling, there is a new precedent that must be observed by other councils.
The only option left would be to challenge the decision in the Supreme Court, but that’s not what the development’s principals and supporters were set up to do, Mr McLeod says.
“And we’re designers.”
So what now?
“We will lodge a new planning applications and we have the support of a car share company to put three cars on the ground floor at the rear of the building with electric charging so we can be zero carbon.”
He says he feels the council will support the new proposal.
“I have no doubt. I’m sure the council will support us, as they’ve done before.”
But it is a 6-12 months set back and all concerned are very disappointed, he says.
Moreland City Council group manager city development Phillip Priest says the VCAT decision means the council needs to revisit its planning scheme, and other councils will be taking a close look as well.
In his views the VCAT argument came down to the opinions of two traffic engineering experts: one advocating for three on-site parking spaces and another for seven. The argument for three won.
According to state requirements, a development the size of Nightingale generally requires 20 car spaces. It all depends on the number of bedrooms, but the council can reduce numbers required depending on certain criteria. In this case it decided “a total waiver could be implemented”.
“What this means for the council now is that we need to look further into how we can strengthen the sustainability objectives regarding car parking and total waivers of car parking,” Mr Priest says.
“We will have to run a planning scheme amendment and do the research and put in place a framework where we would accept development without parking and then VCAT would need to consider that planning framework.
“The conversation now has to happen with council,” he said.
“I don’t believe we are alone.”
Moreland is not.
The City of Melbourne, for instance, exempts new apartment buildings from parking, something the council is looking to roll out in its near CBD suburbs as well.
The City of Sydney also has no minimum car parking requirements and at least 10 new apartment buildings have no parking, according to the Lord Mayor.
So where did all this start? Where did the objection come from?
Jeremy McLeod was uncertain and unable to shed much light except to say the VCAT challenge came from the developer on the adjoining site at 8 Florence Street – Chaucer Enterprises.
The Fifth Estate spoke to a woman at Chaucer’s listed phone number who identified herself as a spokeswoman for Chaucer but refused to give her name or to go on the record. She said that all she would say was that the issue related to “parking illegally” in front of the company’s site, but declined to elaborate.
The Fifth Estate also called the developer’s representative, Planning and Property Partners, but company director Paul Little said he was not authorised by his client to make any comment.
The Chaucer development, next to Nightingale, according to the judgment is to have five levels over a basement car park and storage area, but it’s the “17 or 18 car parking spaces” in the basement with car stacker that seem to be at the root cause of the issue.
In essence the judgment questions the equity of why one developer would be obliged to have multiple car parks while others are not.
Mr Byard said there could be an additional traffic and parking burden placed on nearby streets by residents (and presumably also visitors).
Moreland City Council believed it had that issue covered by disallowing any residents of Nightingale to have resident parking permits. However, the judgment said there was no way to stop residents owning cars nor to stop them parking in nearby streets covered by another council.
Patrick Fensham, national leader urban and regional planning with SGS Economics and Planning, says at first glance the decision seems to lock in a housing product with cars, in an area where the cost of parking doesn’t reflect market preferences.
In inner city areas well served by public transport, there tends to be 10-40 per cent of resident (at least 20-30 per cent on average) who don’t have cars.
In the end, reading the judgment, Mr Fensham says he has “a lot of sympathy” with the VCAT decision, particularly in the absence of a comprehensive approach to on-street parking by council.
He pointed, in particular, to this part of the judgment:
In any event, it is not only what is acceptable to the residents. What about other and nearby land owners, residents, tenants, commercial users and the public generally? Are they to be imposed upon, and parking opportunities in the streets nearby to be devoted to these two private developments to the exclusion of others and their visitors and customers, and where other developments are required to make a contribution to meet the car parking demand that they generate?
Mr Fensham suggested councils could do themselves a favour by doing “more joined up thinking” by supporting the lack of parking with more targeted planning controls (and perhaps liaising with adjoining councils to align strategies?).
After all, he says, parking on the street is not a right, it is a privilege provided by council.
Some extraneous observations, perhaps
Mr Byard also made observations of a general nature on sustainability and the value of energy efficiency that don’t seem to be entirely relevant, and perhaps reflect a grappling of the old order with a new paradigm that doesn’t fit preconceptions.
For instance, in relation to the development’s claim to provide more affordable housing he was concerned about profit taking in The Commons that might negate “affordable housing” for buyers or owners, and pointed to the sale of a unit in The Commons for $600,000:
“[The Commons] likewise is supposed to provide affordable housing but affordable there really means cheaper development costs, and not necessarily cheaper housing for purchases or tenants. A two bedroom flat there is reported to have been sold for over $600,000 which, on today’s prices, does not strike me as justifying the description of being affordable. Cheapness of construction may mean no more than a larger profit for the developer, bearing in mind the attractiveness, from many points of view, of the location of the review site and The Commons. Even if an apartment was sold for a so called ‘affordable’ figure there would be nothing, so far as I can see, to prevent the purchaser from immediately capitalising on the advantage by reselling for over $600,000. No mechanism for preventing such gazumping is suggested.”
However, Mr McLeod said that in Nightingale there would be provisions that would prevent owners from re-selling for more than market increases. He said:
“Nightingale is intended to be a triple bottom line housing model. Environmentally, socially and financially sustainable. To this end Nightingale operates at a capped 15 per cent profit on cost and is financially transparent for its future residents. The residents are provided with the financials of the project.
“A restrictive covenant is in place over each title to keep the apartments financially sustainable into the future. The covenants cap the resale price at the purchase price plus the indexing of their suburb and require that the apartment be first offered at this price point to the Nightingale waitlist.
“None of the residents were put off by this. In fact one resident Samantha said that it just made her certain that she was buying into the right building and moving in with the right community.
“The future of Nightingale is set.
“The VCAT tribunal member ether did not hear this or did not understand it.”
Likewise Mr Byard makes a call on the potentially administratively burdensome travel provisions for Nightingale which include “so called ‘green travel plans’” that include a $500 levy for each bedroom, to be used to buy public transport travel cards.
“This appears as a worthwhile arrangement although administratively burdensome to the future body corporate arising from subdivision of the proposed development. Such body corporate may or may not prove willing to sustain such arrangements over the long term.”
There are plenty of burdens on body corporates, but is it the sustainability nature of this provision that commands more attention than non-green administrative burdens?
On energy, Mr Byard is dismissive.
“There are other aspects of affordability such as reduced running costs. A development that has no airconditioning, and needs none, will save on electricity. That is just an example of which there are likely to be others. Nevertheless such aspects are likely to be minor and marginal compared with the affordability or otherwise of the cost of purchase of the dwelling.”
Jeremy McLeod says there is no magical “Julian Burnside” to challenge the decision in the Supreme Court.
Moreland City Council says the only challenge possible would be on a point of law.
But then again, speaking to Mr McLeod and others, Nightingale might have had a set back but the development won’t stop now. The movement it’s helped to ignite is also now well on the way and with councils potentially scrutinising the VCAT decision and tightening their frameworks to withstand challenge, it will only get stronger.